SUPPLY CHAIN MANAGEMENT PPT ON SCM INTRODUCTION

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1. DEFINITION What is a distribution channel? A distribution channel is the network of individuals and organizations involved in getting a product or service from the producer to the customer. Distribution channels are also known as  marketing channels  or  marketing distribution channels . 2

2. Types of distribution channels Direct.  With the direct channel, the company sells directly to the customer. For example, a brewery that brews its own beer and sells it to customers at its own brick-and-mortar location employs a direct channel of distribution. The seller delivers the product or service directly to customers. The vendor might also maintain its own sales force or sell its products or services through an  e-commerce  The direct channel approach requires vendors to take on the expense of hiring and training a sales team or building and hosting an e-commerce operation.

3. Indirect.  Indirect channels use multiple distribution partners or intermediaries to distribute goods and services from the seller to customers. Indirect channels can be configured in the following ways: With the  single-tier  distribution model, vendors develop direct relationships with channel partners that sell to the customer. In the  two-tier distribution model , the vendor sells to distributors that provide products to channel partners, which, in turn, package products for the end customer. Two-tier distribution helps smaller channel partners that would have difficulty establishing direct sales relationships with large vendors.

4. Hybrid.  Hybrid channels combine the characteristics of direct and indirect channels. The seller uses both direct and indirect methods. For example, a manufacturer might sell an item on its e-commerce website, but then an intermediary delivers the physical product to the customer. The customer still has a direct interaction with the seller, but an intermediary is also involved.

5. Examples of distribution channel intermediaries Intermediaries are used in indirect channels to distribute, sell and promote goods and services. Intermediaries may more commonly be referred to as middlemen. Examples of intermediaries include the following : Wholesalers are intermediaries between manufacturers and retailers. Agents represent a person or entity and serve as an intermediary between buyers and sellers. Brokers are similar to agents but represent a person or entity on a limited, per-transaction basis. Catalogs are collections of products gathered in a publication and distributed at regular intervals. Consultants are individuals who connect distributors with intermediaries lower on the  supply chain  and give advice on how to distribute product effectively. Distributors are in direct contact with the manufacturer but sell to end users. Retailers either buy from the manufacturer or another intermediary and distribute to consumers through shops, grocery stores or websites. Independent software vendors are vendors that sell their software using a marketplace. Managed service providers ( MSPs ) offer managed software services. Online marketplaces are e-commerce sites that connect buyersand sellers. Original equipment manufacturers, or  OEMs , are companies that sell a product and markets itself as the company that originally manufactured the product. Value-added resellers ( VARs ) are resellers that add value to a product or service before reselling it.

6. https://www.youtube.com/watch?v=WEqXH4PuF8c

7. EXAMPLE The alcohol industry is a good example of a distribution channel with multiple levels. There are laws that require wineries to first sell their products to a wholesaler before selling to a retailer. Direct-to-consumer models like e-commerce are examples of low-level, short distribution channels. For example, customers can buy products directly from producers on Amazon.